Corzine Key Man Bonds Default Before Coupon: Corporate Finance

Bond investors lent MF Global Holdings Ltd. $650 million three months ago in a bet Jon Corzine would succeed in turning the futures broker into a mini-version of Goldman Sachs Group Inc. The firm filed for bankruptcy before making its first interest payment on the debt.

Investors from mutual fund manager Franklin Resources Inc. to teacher retirement plan manager TIAA-CREF purchased $325 million of debt sold as 6.25 percent senior unsecured notes, according to data compiled by Bloomberg. The bonds, due in 2016, dropped 8.25 cents to 40 cents on the dollar today after the brokerage filed for bankruptcy protection yesterday and U.S. regulators investigated whether hundreds of millions of dollars are missing from client accounts. Another $325 million of convertible bonds sold in August fell to 39 cents.